BearingPoint Could Lose Federal ID Card Contract

The federal government has decided to reopen the bidding to produce hundreds of thousands of universal government identification cards, stripping the McLean consulting firm BearingPoint Inc. of a potential five-year contract.

It is an unusual move for the General Services Administration, coming just two months into the $104 million contract. BearingPoint will continue to develop ID cards for government employees and contractors through early January, after which the GSA will either ask for more bids or allow agencies to choose from an approved list of vendors.

GSA officials said the decision had nothing to do with BearingPoint's performance but rather that the agency felt there were more companies that could develop the appropriate technology. The cards make use of biometric data such as fingerprints and retinal scans and contain computer chips that can store more personal information. GSA officials say that with more options, they can command lower prices.

"I wouldn't say this is a dropping of anybody but an evolution that is underway," said John C. Johnson, assistant commissioner for integrated technology services at the GSA's Federal Acquisition Service. "This is not a judgment on BearingPoint or anyone else."

BearingPoint spokesman Steve Lunceford said the company has been "privileged" to work on the contract and is determined to compete after it expires. The firm has issued about 100 ID cards in Washington, New York, Atlanta and Seattle, according to the GSA.

"We feel we've got the leading solution, and we look forward to welcoming further competition," Lunceford said.

The GSA's announcement is the latest hurdle facing the company. BearingPoint has not filed timely financial statements in more than two years after inheriting accounting and other problems from its days as part of KPMG. More recently, it has been wrangling with its lenders over the terms of bonds worth $200 million.

As part of the White House mandate for universal ID cards across the government, all federal agencies are up against an October 2008 deadline to issue the cards to an estimated 8 million employees and contractors. Each agency may hire its own contractor, but the GSA's smart-card program is meant to be an alternative for agencies that prefer not to. BearingPoint was developing cards for 38 agencies.

Since BearingPoint was awarded the contract in mid-August, competing firms, including Lockheed Martin Corp. and Electronic Data Systems Corp., objected to the selection, forcing BearingPoint to stop work for about 10 days. Some industry experts suspect that the GSA might have feared further protests and decided to move to a different purchasing system.

Under this system, government agencies would buy products from an approved list of vendors under terms already negotiated by the GSA. The alternative purchasing system also would allow state and local governments to buy any ID services offered.

BearingPoint, Lockheed Martin and Electronic Data Systems are among the 10 companies on the approved list, and the GSA said it expects more to qualify in upcoming months.

Thomas Greco, a vice president at Herndon-based Cybertrust Inc., which is working with BearingPoint to develop the ID technology, said more companies have adjusted in recent months to the stringent government requirements on the IDs.

"Some of the thinking within the GSA may be there's more people on the list, so there's more chance to get better pricing," Greco said. "I think this is truly GSA just taking another bite at the apple."

Staff writer Stephen Barr contributed to this report.